Health finance

DRG is a casemix system that groups patients with similar diseases and similar expenses into Diagnosis Related Groups. The system is developed and maintained by The Danish Health Data Authority in order to provide insight into hospital activity and manage the funding in the healthcare system at hospital level.

In the DRG system, patients with similar diseases and similar expenses are organised into groups that each has a tariff. The latest revisions have approximately a thousand groups and covers both inpatient and outpatient activity at Danish public hospitals. 

Grouping logic 

The DRG groups are adjusted annually to reflect the changes in clinical practice and behaviour, advances in technology and structural changes in the healthcare sector. Every year, the regions, hospitals and clinical societies may send in suggestions for adjustments to the grouping logic to The Danish Health Data Authority. 

Information required in the grouping of patient records are diagnosis, procedures and patient information.
Several rules determines which group a patient record is assigned. 

When grouping patient records, the following criteria has to be met:

• The grouping of patients must be clinically meaningful  
• All groups must be resource homogeneous 
• The number of groups should be limited

The Health Data Authority has developed two different tools that provide an insight into the grouping logic and the tariffs for the different groups.

Visual DRG is a graphical representation of the grouping logic.
Go to Visual DRG (in Danish)  

Interactive DRG is a tool that can identify what DRG group a given patient registration information belongs to.
Go to Interactive DRG (in Danish)  

Cost calculation

The Danish Health Data Authority annually calculates the DRG tariffs and is responsible for the maintenance and collection of cost data from the hospitals. 

Once a year, a cost database for somatic public hospital activity is generated. The foundation for the cost database is the distributed cost accounts, for which the hospitals are responsible. The distribution cost accounts combined with activity data constitute the cost database. 

Today, all Danish hospitals are handling the distributed cost accounts in the same scripted Excel template setup with nationally defined standards. The tariffs are based on the national average of two years and are validated before being finalised.

Productivity

To ensure insight into use of resources in the hospitals, the Danish Health Data Authority helps preparing the annual statements of productivity in the hospitals in collaboration with each of the five regions, the interest organisation Danish Regions, the Ministry of Finance and the Ministry of Health.

The purpose of the productivity report is to create an overview of the level and change in the productivity in the public hospitals at both national level, regional level and hospital level.

The hospital activity is calculated by using the DRG tariffs. The annual changes in the tariffs thus affect the statement of productivity.

The expenses are calculated on the basis of the regions’ and the hospitals’ financial reports. 

Financing

With regard to hospital treatment, The Danish healthcare system is funded through four types of grants, which are partly administered by the Danish Ministry of Health. The types of grants are:

• Block grant: The block grant depends a number of factors, e.g. socioeconomic characteristics for each region.
• National incentive model: In addition to the national block grant, the regions also receive financing based on fulfillment of the incentive model. 
• Co-financing by the municipalities: The municipalities pay a share of their citizen’s regional health expenses. This is to create incentives for effective health prevention in the municipalities. 
• Settlement between the regions: Patients can decide to be treated in any hospital in Denmark. However, the region of residence pays for the treatment. Therefore, there is a regional payment scheme, where the regions charge each other for health expenses based on agreements.